As part of a compromise with Republicans on a year-end tax plan, a group of House Democrats is pleading with their party leaders not to include corporate tax breaks unless renewals for the increased child tax credit & the gained income tax credit are also included.
Republicans want to eliminate a requirement that firms amortize R&D costs over five years to allow them to write off these costs yearly. Democratic lawmakers have also endorsed the proposal.
Earned Income Tax Credit & The Child Tax Credit
58 House Democrats, headed by Representatives Jimmy Gomez of California and Pramila Jayapal of Washington, signed the letter delivered to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer on Thursday. The lawmakers claimed repealing the clause would cost the government money and provide firms “huge” tax breaks. The legislators wrote, “We should not prolong corporate tax advantages unless and until we give additional relief for people.
The Democrats’ American Rescue Plan, passed last year, included increases to the gained income tax credit and the child tax credit, but they have since expired.
Republicans are presently requesting around $50 billion in tax savings, which would include a provision for research and development costs, the reinstatement of loan interest deductions, and the continuation of the tax incentive for corporations known as “bonus depreciation.”
Congress has another opportunity to restore the expanded Child Tax Credit in their lame duck session. Doing so would greatly reduce child poverty and hunger. https://t.co/ViPsY6GPvm
— Tax Policy Center (@TaxPolicyCenter) November 20, 2022
The Extended Child Tax Credit
Ron Wyden, the chair of the Senate Finance Committee, told reporters Tuesday that he would back some company tax relief. The Earned Income Tax Credit and the Elongated Child Tax Credit would incur well over $50 billion in costs and would probably need to be reduced to win over enough Republicans to pass the Senate.
Jayapal stressed the child tax credit’s contribution to reducing child poverty & the potential benefits it could provide for families dealing with rising inflation in an interview on Thursday. According to the U.S. Census Bureau, the increased child tax credit reduced child poverty by 46% between 2020 & 2021. Jayapal remarked, “We need to do whatever we can for working and impoverished people who are struggling. “And I believe the election outcomes were a call to action for us to do more, not less,” she added reports, Bloomberg.
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